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Debt of RGK group of companies for gas balancing services grew by UAH 143 mln in May

Debt of other companies decreased by UAH 125 mln.


June 21, 2018, Kyiv – Gas distribution network operators united by a brand named Regional Gas Companies Group (RGK) are remaining the biggest debtors of Ukrtransgaz with the accumulated debt - UAH 16.5 bln that amounts to 65% of total debt.


In May the debt of RGK increased by UAH 143 mln. At the same time, the debt of other companies decreased by 125 million UAH.


The total debt of all Ukrtransgaz’ clients for the gas balancing services increased by UAH 19 mln compared to the previous month, and on May 31, 2018 amounted to UAH 25.5 bln.


Ukrtransgaz major debtors


PJSC "Kharkivmiskgaz," a part of the RGK Group, is continuing unauthorized gas withdrawal without taking any actions to resolve the current situation. In May, Company’s debt grew by UAH 219 mln to UAH 5.3 bln.


The following companies are also among the biggest debtors: PJSC "Donetskoblgaz" - about UAH 3.8 bln, PJSC "Kryvorizhgaz" - UAH 3 bln, PJSC "Dnipropetrovskgaz" - UAH 1.9 bln, PJSC "Kyivoblgaz" - UAH 1.4 bln, PJSC " Luhanskgaz "- UAH 1 bln.


The origin of debts


Under the GTS Code, JSC Ukrtransgaz as an operator of the GTS provides transportation and balancing services based on a standard contract signed with all customers (NERC No. 2497). Clients send nominations (applications) for a certain amount of gas. At the end of the month, Ukrtransgaz makes fact check (allocation) of the actual amount of gas consumed. Actual amount of gas transported may significantly vary from the volumes ordered in nominations. The volume of balancing gas is calculated as the difference between the volumes of gas delivered and withdrawn at the entry/exit points at the GTS based on the actual data of gas transported according to allocation.


Operator’s primary responsibility is to carry out balancing of the system. Ukrtransgaz cannot restrict or stop gas consumption at the exit points from GTS to gas distribution operator’s networks except for direct customers.


Customers of the transportation service and gas distribution network operators main responsibility is to avoid and settle possible imbalances according to the Code of GTS.


The significant volume of imbalance has been created, because the gas distribution network operators allow the natural gas withdrawal by the district heating companies, assigning the gas supplies to Naftogaz of Ukraine without any justified reason. 


When assigning such nominations to Naftogaz of Ukraine, operators of gas distribution networks cannot confirm Ukrtransgaz that the nomination procedure is carried out legitimately following the Code of the GTS. Naftogaz of Ukraine does not approve such nominations.


Nominations at the regulated tariff are confirmed by Naftogaz of Ukraine as the supplier under PSO (public service obligations) in case the following conditions are met:

- An agreement signed between the Client and Naftogaz of Ukraine

- The Client’s company has no debts to Naftogaz of Ukraine, or it has paid 90% of its debt or restructured its current debt to Naftogaz of Ukraine.


Hence, the nomination can be confirmed only in the case there is a contract and at least one of the settlement options have been secured. In other cases, Naftogaz of Ukraine has no legal grounds for providing such service.


In addition to the unreasonable assignment of supplies to Naftogaz of Ukraine, the withdrawal of a significant amount of gas is carried out by operators of gas distribution networks without nominations. Therefore, operators of gas distribution networks make the unauthorized unlawful withdrawal from Ukrainian GTS.


Following the requirements of the GTS Code, gas distribution network operators can withdraw natural gas only if they have valid contracts. In the absence of supply contracts, operators are required to stop the unauthorized withdrawal of natural gas from the gas transmission system.


Since the beginning of the year, the volume of withdrawal without the submission of nominations by operators of gas distribution networks amounted to about 50% of the total size of imbalances.


Thus, operators of gas distribution networks allow significant unauthorized withdrawal of gas from the system and do not fulfill their obligations under the Codes of the GTS and GDN. The gas distribution networks operators artificially fake the gas supply problem to cover the illegal withdrawals of gas that had not been paid. Unlawful withdrawal has nothing to do with the issue of gas supply to the distric heating companies.


Legal actions


Ukrtransgaz systematically works on debt collection under Ukrainian law. In particular, under the request of the Company, the Chief Investigatory Directorate of the General Prosecutor's Office of Ukraine conducts pre-trial investigations into the fact of seizure and embezzlement by the officials of gas distribution network operator’s funds of PJSC "UKRTRANSGAS" in particularly large amounts. There are over 35 cases for the total amount of about USD 15 bln for the compulsory collection of debts within the lawsuits of the operator of the GTS from debtors of the balancing services according to the current legislation.